Jute exports on the mend | The Daily Star
12:00 AM, January 20, 2021 / LAST MODIFIED: 07:29 PM, January 20, 2021

Jute exports on the mend

Bangladesh's jute industry is passing exceptional times.

With raw jute trade at a historic high amid scarcity resulting from low yield, export earnings are surging.

However, millers said much of the growth in export receipts of jute yarn, twine, sacks and bags are the result of a price increase.

The volume of shipments increased too but the extent of growth was not as much as the spike in value growth.

Data from the Export Promotion Bureau (EPB) showed that export earnings from the main exportable yarn and twine soared 42 per cent year-on-year to $449 million in the July-December period of fiscal 2020-21.

Similarly in case of jute sacks and bags, exporters fetched 56 per cent higher earnings to $92 million in the fiscal's first half.

Millers said sales of 100,000 bales of previous stocks of jute sacks by state-run Bangladesh Jute Mills Corporation and private mills and higher demand for new carpets in the West amid increasing stays at homes for lockdowns buoyed shipments of jute yarn.

Yet the extent of growth has been much lower than the spike in value of exports.

"Export value has increased mainly because of prices of raw jute," said Sheikh Nasir Uddin, chairman of Akij Jute Mills, one of the world's biggest jute yarn makers in terms of processing capacity.

He said prices of raw jute, the key ingredient of jute yarn, almost doubled from around Tk 2,200 per maund (around 37 kilogrammes). And this is being reflected in the export receipts, he said.

Citing jute yarn, which accounts for more than three-fourth of the country's export proceeds from jute and jute goods, he said average monthly shipment from the Chattogram port was 36,704 tonnes in 2020, up 3 per cent from that in the previous year.

"Applications or uses of jute yarn have not increased. Uses of jute and market of jute would have increased had we been competitive in prices," he said.

This is the highest ever export growth in value registered by millers and exporters in recent years. Jute and jute goods exports rebounded in fiscal 2019-20 after a 20 per cent dip the previous year.

And this year, export earnings continued to stay in the positive thanks to production shortages in two major jute producing nations, Bangladesh and India, and relatively good demand for jute goods and yarn.

Just after the harvesting of raw jute in the July-August period last year, prices of raw jute began rising.

Prices crossed previous record highs by the end of September amid middlemen increasing their stocks and slow release by farmers to cash in on supply shortages resulting from a flood-induced production fall.

The spiralling prices alarmed millers and they demanded that the government curb exports of raw jute to ensure increased availability in the domestic market.

Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue (CPD), said this has been an unusual year for the jute sector.

"It is an exceptionally good year for jute exports as shipments have not declined. Instead, it has increased," he added.

Moazzem went on to say that prices of raw jute will decline if there is good crop in the coming season.

The finest raw jute is trading at Tk 4,000-4,200 per maund, said millers, who doubt estimates of total jute yields citing spiralling prices.

The Department of Agricultural Extension (DAE) estimates that farmers bagged 72.86 lakh bales last season after counting flood related losses.

Md Zahid Miah, chairman of the Bangladesh Jute Spinners Association (BJSA), said jute mills require 55 lakh tonnes of raw jute to make yarn and other jute goods.

"But we are not getting jute and prices are going up," he said, citing that increased prices of raw jute are adding to the cost of production of jute goods, including yarn.

Miah, also managing director of Karim Jute Spinners, another leading exporter, said the demand for jute yarn increased in countries specialising in making carpets, such as Turkey.

Having to stay back at home owing to Covid-19 has led to a rise in demand for new carpets in western markets. That is why there is some increased demand for yarn, he said.

However, the volume of growth is not significant, he added.

He said high prices of raw jute were affecting mills and many of them were on the verge of suspending production as current prices were too high to draw in buyers in the coming month.

"Our exports in terms of volume is likely to decline by the end of fiscal 2020-21," said Zahid, adding that they had already reduced production.

"Buyers are making inquiries but we are turning them down because of high prices," he said.

Mahmudul Huq, chief executive officer of Janata Jute Mills, said in the past there usually had been carry-over stocks of jute. This year, there is no carry-over stock, he said.

"It will be tough for financially distressed factories to continue production," he said, citing increasing prices of raw jute.

Huq said the volume of export of jute goods rose this fiscal year because of sales of 100,000 bales of jute sacks by the BJMC.

Also because of lockdowns and people in the west increasing the time they spend at home, the well-off and middle class are increasing spending for home décor, including new carpets.

As a result, demand for yarn has risen among carpets makers, particularly in Turkey, he said.

Giridhari Lal Modi, chairman of Uttara Jute Mills, said exports were likely to suffer badly in the coming months owing to high prices of raw jute.

"We are getting a lot of inquiries. But they are not responding after we answer their queries," he said.   

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